2. On December 14, 1998, the Ministry of Commerce published in the DOF the relevant determination declaring the initiation of the administrative investigation in connection with the imports of urea original from the United States of America and the Russian Federation, for a period of review from May 1st, 1997 thru April 30th, 1998. The Ministry of Commerce dismissed the request for an administrative investigation regarding the imports original from the Republic of Latonia.

3. On December 10, 1999, the Ministry of Commerce published in the DOF the Preliminary Determination of the administrative investigation at issue, in which the Ministry of Commerce resolved to continue the mentioned investigation without the assessment of provisional countervailing duties whatsoever.

4. On April 17, 2000, the Ministry of Commerce published in the DOF the Final Determination of the administrative investigation at issue, in which the Ministry of Commerce resolved to conclude the mentioned investigation without the assessment of definitive countervailing duties whatsoever, based upon the reasons that are subject to analysis in this review (the “Final Determination”).

B. OF THE REVIEW PROCEEDINGS BEFORE THIS BINATIONAL PANEL

1. On May 4, 2000, AGROMEX filed a Request for Panel Review in accordance with Article 1904 of the NAFTA regarding the Final Determination.

2. On June 5, 2000, AGROMEX submitted a Complaint challenging the Final Determination (the “Complaint”).

3. On June 16, 18 an 19, 2000, the Ministry of Commerce, Union Oil Company of California Corporation (“UNOCAL”), Promotora Nacional Agropecuaria Mexicana, S.A. de C.V. (“PRONAMEX”) and JSC Togliattiazot (“JSC”) submitted, respectively, their corresponding Notices of Appearance in opposition to the Complaint filed by AGROMEX. By means of several pleadings thereafter, the above mentioned participants, including AGROMEX, appointed their respective counsels for record, and requested their authorization and/or revocation for protective orders on confidential information in this review.

4. On September 6, 2000, AGROMEX submitted a Brief in support to its own Complaint (the “Brief in Support to the Complaint”).

5. On October 13, 2000, the Ministry of Commerce submitted the relevant copies of the Final Determination, the index for the administrative record, and both confidential and public versions of the administrative record.

6. On November 1 and 3, 2000, the Ministry of Commerce, PRONAMEX, JSC and UNOCAL submitted, respectively, their corresponding Briefs in opposition to the Complaint filed by AGROMEX (respectively, the “Brief in Opposition to the Complaint” of each participant).

7. On November 21, 2000, AGROMEX filed a response to the Briefs submitted by the Ministry of Commerce, PRONAMEX, JSC and UNOCAL (respectively, the “Brief in Response” to each participant).

8. On December 4, 2000, AGROMEX and the Ministry of Commerce filed the appendix to their respective Briefs.

9. On November 6, 2001, this Binational Panel issued an Order setting the date for the Public Hearing to be held on December 4, 2001. By means of several pleadings thereafter, the participants appointed their respective representatives to intervene during the Public Hearing.

10. On November 15, 2001, JSC filed a motion to exclude from the Panel review the imports from the Russian Federation.

11. On November 22, 2001, the Ministry of Commerce filed a motion in order for the topics on the standard of review and the scope of the review by the Binational Panel to be discussed during the Public Hearing.

12. On December 3, 2001, this Binational Panel issued an Order by which it granted the motion filed by JSC to exclude from the Panel review the imports of urea from the Russian Federation, based on the reasons referred to in section III. A. hereof.

13. On December 4, 2001, the Public Hearing for this review was held in Mexico City. At the Public Hearing, this Binational Panel denied the motion to hear allegations on the standard of review and the scope of the review by the Binational Panel, upon considering that such issues were not controversial. On the same date, the Ministry of Commerce filed a pleading including a written version of its oral interventions at the Public Hearing.

14. On January 28, 2002, this Binational Panel issued an Order requesting the Ministry of Commerce to submit certain information referred to in items 54, 73 and 74 of the Final Determination, in connection with information allegedly provided by Petroquímica Cosoleacaque, dated December 10, 1999 and January 28, 2000.

15. On January 31, 2002, the Ministry of Commerce submitted information in response to the Order mentioned in the paragraph immediately above.
 

A. ON THE IMPORTS FROM THE RUSSIAN FEDERATION

1. This Binational Panel resolved, in first place, on December 3, 2001, certain motion in connection with the merits of this Panel Review on the imports of urea from the Russian Federation, which was granted based on the reasons stated herein below.

2. Specifically, the Ministry of Commerce and the rest of participants in opposition to the Complaint of AGROMEX, argued that there is no basis for this Panel to review the imports from a country that is not a party to the NAFTA, by which this review is governed. Specifically, the Ministry of Commerce stated in its Brief in opposition to the Complaint of AGROMEX, the following:

“It has no merits at all that by means of a review of a final determination under NAFTA Chapter XIX, the Complainant intends to have imports from the Russian Federation imposed with countervailing duties, taking into consideration that such country is not a party to the NAFTA, and therefore it would be illegal for a panel to make a decision affecting the imports from such country”. Brief in Opposition to the Complaint, Pages 21-38

3. In the same token, it is undisputed that AGROMEX, in its capacity of Complainant, did never intend that this Binational Panel actually extended its review to the imports of urea from the Russian Federation. Specifically, in its Brief in response to the ones submitted by other participants in opposition to the Complaint, AGROMEX stated the following:

“...it is important to clarify to this Panel, that... in the Brief of the Complainant itself, there is a mention to the imports of urea from the United States of America and the Russian Federation, [and that mention is] because that is a reference of the review proceedings on dumping, that is to say, it is only a mention to the name of the investigation, but in no way that reference is made in the sense that this Complainant has the intention of having this Panel review the Final Determination as for the imports of urea from the Russian Federation too...” Brief in Response, Page 12 (emphasis added)
 

4. Accordingly, to the extent that it is undisputed that AGROMEX -as acknowledged by AGROMEX itself-, does not request this Binational Panel to make a review in connection with the imports of urea from the Russian Federation, regardless of the exporting country, this Binational Panel resolved to grant the motion filed by JSC to naturally exclude the imports of urea from the Russian Federation from the current review.

B. ON THE SCOPE OF THE REVIEW BY THIS BINATIONAL PANEL

1. Secondly, this Binational Panel resolved certain motion related to the scope of the review that the Panel may perform according to the attributions granted by the Article 1904 of the NAFTA.

2. Specifically, the controversy arose from certain request made by the Complainant AGROMEX, in the sense that this Binational Panel should “declare the plain and total nullity of the Final Determination” Brief in Support to the Complaint, Page 9. On this subject, AGROMEX literally expressed the following:

“... legally speaking, the final decision of this Panel should be made in order for the [Ministry of Commerce] to revoke the determination at issue in all its terms, so it may issue another one in accordance with law...” Brief in Response, Page 45

3. In this regard, the Ministry of Commerce -and in the same sense, UNOCAL-, made the following allegation:

“In the same taken it is important to clarify that panels are not empowered to nullify or revoke a final determination of the investigating authority. According to Article 1904.8 of the NAFTA, panels may only affirm or remand the final determination in order for the investigating authority to adopt measures not incompatibles with its decision...”. Brief in Opposition to the Complaint, Page 30

4. In the opinion of this Binational Panel, the apparent controversy may and must be resolved strictly in accordance with the NAFTA express provision as stated in Article 1904.8, according to which this Binational Panel may confirm the Final Determination o remand it to the prior instance [the investigation authority] in order for it to take any measure not incompatible with the Panel’s decision. Accordingly, the attributions granted to this Binational Panel are strictly limited to confirm or remand to the Ministry of Commerce the Final Determination at issue. In the latter event, the Ministry of Commerce, as the Investigating Authority, must take any measures not incompatible with this Panel’s Decision.

C. ON THE STANDARD OF REVIEW

1. A last issue prior to the controversial ones with respect to the Final Determination, deals with the standard of review that this Binational Panel must apply to review it.

2. The apparent dispute on this issue arises from several statements made by the Complainant AGROMEX, in regard to the alleged possibility that a Binational Panel has to apply, besides of the standard of review set forth in Annex 1911 of the NAFTA -that is to say, Article 238 of the Federal Tax Code (Código Fiscal of the Federación) (“CFF”), or any other law that may substitute it, based only on the record-, additional or supplemental provisions to the CFF. Specifically, AGROMEX stated essentially the following:

“...among the laws infringed we may point out the Mexican Constitution, the 1994 [Antidumping Code], the Foreign Trade Law and its Regulations, as well as several provisions of supplemental application such as the Federal Tax Code and the Federal Code on Civil Procedures...” Brief in Support to the Complaint, Page 12

“...in the reviews before a panel, several law provisions may apply, and this circumstance is based on what is provided for in Article 1902.1 of the NAFTA, which indicates... [“]The law provisions on antidumping and duties, as may apply for the domestic laws of each Party, are the legislative precedents, the regulations, the administrative practice and the judicial precedents or authorities [”] ...it is legally acceptable for the panel to take into consideration such law provisions as mentioned by the Complainant in its brief... so that... the panel... may take into account each and all of these provisions as mentioned by the Complainant in its brief, for all applicable legal effects...” Brief in Response, Pages 14-17

3. The Ministry of Commerce -and the participants in opposition to the Complaint- argued essentially that this Binational Panel should only follow and apply the language of Article 1904.3 of the NAFTA, which states that a Panel shall apply the standard of review set forth in Annex 1911 [i.e., the standard provided for in Article 238 of the CFF, or any other law that may substitute it, based only on the record] and the general legal principles (principios generales de derecho) that a court of the importing Party would otherwise apply to review a determination issued by the competent investigating authority.

“The standard of review that panels must apply is set forth in Article 1904.3 of the NAFTA, which provides that: [“]The panel shall apply the standard of review set forth in Appendix 1911 and the general legal principles...[”] Moreover, the Appendix 1911 of the NAFTA provides that... [“] in the case of Mexico, the standard of review provided for in Article 238 of the Federal Tax Code, or any other law that may substitute it, based only on the record[”].” Brief in Opposition to the Complaint, Page 26

The discussion on the matter even reached the would-be “intention” of the “negotiators” of the NAFTA, of allegedly including purportedly additional or supplemental provisions to the CFF or other laws. In this regard, the Ministry of Commerce sustained the following:

“... the negotiators of NAFTA did not have the intention of including, as part of the standard of review, any other provision different to the one of the Federal Tax Code, because if they had so intended, they would have indicated it expressly... ...the standard of review must not be confused with the scope of the review or the faculties that a jurisdictional entity has, such as the [former] Federal Tax Court or panels... ...the investigating authority denies the supplementary application of the several law provisions mentioned by the Complainant... ...we must not incur in the error of considering that this panel, upon performing its review, is an arbitral entity in charge of the constitutional control, because in Mexico only the Federal Courts are empowered to do that...” Brief in Opposition to the Complaint, Pages 26-37

The above was replied by AGROMEX as follows:

“...In this regard, a panel review may be based in several law provisions, and this circumstance is supported by what is provided for in Article 1902.1 of the NAFTA... In the same token, it is worth mentioning that the Investigation Authority itself agrees that... Article 85 of the Foreign Trade Law provides that in the absence of express provision of such law in regard to administrative proceedings on the matter of unfair international trade practices, Article 197 of the Federal Tax Code shall apply, and that Article 197 of the Federal Tax Code provides that in the absence of express provision the Federal Code of Civil Procedures shall apply.. ...it has been demonstrated that the negotiators of NAFTA did have the intention of including as part of the standard of review several law provisions as stated in Article 1902.1 of the NAFTA...” Brief in Response, Pages 10-12

4. This Binational Panel is in agreement with what is expressed by the Ministry of Commerce and the participants in opposition to the Complaint of AGROMEX. In opinion of this Binational Panel, the language provided for in Article 1904.3 of the NAFTA with respect to the standard of review that a Binational Panel must apply, does not create any confusion whatsoever.

The language of such provision does expressly refers to Article 238 of the CFF (or any law that may substitute it), based only on the record, and to the general legal principles that a court of the importing Party would otherwise apply to review a final determination issued by the investigating authority.

5. Under the provision at issue, the only remaining possible discussion on the standard of review would deal with the determination of the manner of application and scope of the general legal principles that “would otherwise be applied by a court of the importing Party to review a final determination issued by the la investigating authority”.

6. In first place, the Mexican court that “would otherwise review the Final Determination and apply the general legal principles” -that is, in the event that the Final Determination were not actually under review by this Binational Panel, but Complainant had decided to challenge it by means of a contentious administrative proceeding- would be, in principle, the Federal Court on Tax and Administrative Justice (Tribunal Federal de Justicia Fiscal and Administrativa).

7. As for the manner in which the Federal Court on Tax and Administrative Justice would apply the general legal principles in reviewing a determination issued by the investigating authority, it must be taken into consideration what is provided for in Article 14 of the Mexican Constitution, whose provisions have traditionally been extended to administrative matters. According to said article, “...the final judgment must be issued in accordance with the literal provision stated in the law, and in the lack of such, [the final judgment] shall be grounded on the general legal principles.” That is to say, the Federal Court on Tax and Administrative Justice should resolve, in first place, according to the literal provision, and only if there is a lack of such express provision, it would be entitled to apply the general legal principles.

8. Finally, it would be only needed to determine the content and scope of the general legal principles that, in the lack of an express provision, would be applied by a Mexican court. In this regard, while it is true that their content may have a wide variety, Article 1911 of the NAFTA provides an exemplificative list of the type of principles that are included within the concept at issue. So, said article mentions that general legal principles, at least for the purposes of Chapter XIX of the NAFTA, include “principles such as legitimacy of legal standing, due process, rules for interpretation of law, matters on non-validity of law and exhaustiveness of administrative resources or appeals”.

9. Therefore, in opinion of this Binational Panel, the controversy with respect to the applicable standard of review -in the sense that this Binational Panel may review the Final Determination based on criteria, provisions or laws different to the one set forth in Article 1904.3-, is only apparent.

10. In opinion of this Binational Panel, the alleged controversy derives, in any event, from an apparent confusion in the allegations made by the Complainant, with respect to what must be understood within the standard of review -to which Article 1904.3 of the NAFTA makes reference-, in connection with the legal provisions and laws to which this Binational Panel must refer to determine whether the Final Determination was issued in accordance with the applicable “Mexican legal provisions in the matter of antidumping and countervailing duties -which is a matter referred to in Article 1904.2 of the NAFTA-.

The matter is so simple like this: the manner in which a binational panel decides whether a determination was issued in accordance or not with the Mexican laws (including all the laws of Mexico), is by applying the criteria set forth in Article 238 of the CFF and the general legal principles, as they would be applied by a Mexican court.

Accordingly, the list of laws referred to in Article 1904.2 (including the Mexican including the Mexican Constitution, international treaties, ordinary laws, etc.) is not, evidently, the standard of review that a panel must apply, but rather precisely the legal provisions that will be the basis to perform the review.¹

11. Based on the above, according to the provisions of the NAFTA, this Binational Panel is obliged to determine whether the Final Determination was issued in accordance with the applicable Mexican law provisions on antidumping and countervailing duties (as provided for in Article 1904 of the NAFTA), by applying the standard of review as set forth in Article 238 of the CFF, based only on the record, and in the lack of an express provision, the general legal principles in the same manner that they would otherwise be applied by a Mexican court.